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How CFGs Strike A Correct Chord With Clients - Outside View by PersonalFN

How CFGs Strike A Correct Chord With Clients

Feb 17, 2017

According to Karvy Private Wealth's India Wealth Report 2016, the total wealth held by individuals in India grew by 8.5% to Rs 304.2 lakh crore in the year 2016 (see table below).

Investments in financial assets also grew, but at a slower pace: 7.14%; mainly due to subdued performance of equity. Among financial assets, there was reasonable growth in fixed deposits, bonds, provident funds and Small Savings Schemes (SSS); the last mainly due to the success of the Jan Dhan Yojana. Individual wealth in physical assets (such as gold and real estate) too grew sharply at 10.32% vis-a-vis a 2% fall in FY15.

Proclivity: Financial Assets vs. Physical Assets

However, the economy is in for a rocky road after demonetisation, which potentially is a risk to the economic growth clocked. After the World Bank's downward revision of growth estimates for India, the IMF too has reduced growth estimates for India to 6.6% (from 7.6% projected in October 2016) for the current fiscal year 2016-17 citing the impact of demonetisation. "Temporary negative consumption shock induced by cash shortages and payment disruptions associated with the recent currency note withdrawal and exchange initiative," were the primary reasons said the report released recently.

Besides, there are global factors in play such as: 'Trumponomics'; the Federal Reserve's endeavour to normalise interest (as market expectations for inflation have advanced); the onset of the process for 'Brexit' taking pace from end-March 2017; economic slowdown in China; and morose economic conditions in Japan (although there's some optimism reported of late).

There is no dearth of financial advisors in the country. Every one flaunts a certification or two and suffixes his/her name with an acronym. But your financial advisor should be a 'Financial Guardian' who is able to recognise the financial and emotional side of the client / prospect using these simple (yet important) principles:

Transparent and Ethical advice:The advisors who have undergone the CFG certification vouch to strongly abide by the principles of ethics. The major bane among clients/prospects is the lack of transparency - disclosures on the part of financial advisors; for instance their compensation structure. CFGs disclose it upfront thus building trust and putting the clients' interest first. CFGs go a step further. They cement the relationship with their clients by understanding their financial health as well as their investment objectives before recommending any financial products.

Thorough research before recommendation: CFGs conduct thorough research and in-depth analysis of the financial products before recommending it to their clients. Clients can be rest assure that the recommendation would help them achieve their financial goals.

Service oriented approach: CFGs build a team of professionals and experts who address the queries of the clients prudently and effectively in a time-bound approach. CFGs explain the rationale of their recommendation to their clients. The idea is to be in sync with the clients' money outlook and avoid confusion. They are open to queries and patiently invest time to resolve them.

Do not believe in one size fits all approach: CFGs are known to offer personalised and customised solutions. They offer financial recommendations after analysing the risk profile of clients. They take into consideration age, financial goals, income, expenses, etc. before suggesting a solution.

Adopt agile investment strategies: At times, there could be stressful situations such as stock market crashes, economic or political uncertainties, and personal emergencies etc. that could create a lot of anxiety and stress in the mind of the client. A CFG provides a sound coping strategy and mental comfort during such times.

Regular review and support: A CFG regularly reviews the client's portfolio to see if it is in sync with the investment objective. A course correction, if required, is proactively done in consultation with the client. Besides, there's operational support. This hands-on approach helps them earn loyalty and trust of clients.

Ask for an honest feedback: A CFG won't hesitate to ask for honest feedback. He/she would proactively seek it and make necessary changes in his/her approach. The idea is to make the client feel appreciated, respected, and at home.

So hope you recognise the need for a financial guardian, who can handhold you professionally and prudently in the journey of wealth creation. Irrespective of where you stand in your finances, it would be wise to seek a second opinion of CFG.

PersonalFN is a Mumbai based personal finance firm offering Financial Planning and Mutual Fund Research services.

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